Is Microsoft the New Robin Hood?

In March, The Seattle Times noticed Microsoft’s General Counsel Brad Smith had “indicated some willingness for the company to pay more in state taxes” and last week, it led Northwestmediacoverage of the company’s voluntary agreement to begin paying an exclusive tax of about $28 million annually. It’s a big change of heart by Smith, CEO Satya Nadella and its 17-year ex-employee who runs much of the budgetary leadership in our legislature, Rep. Ross Hunter. A significant portion of this tax will pay to expand computer science degree programs that the company’s requested. Here’s what everyone glossed over.

Coincidentally, there are unconfirmed reports that the state has raised the royalty tax rate back to 1.5 percent this year. If Hunter hadn’t rewritten the law for Microsoft in 2010, the company would be paying $650 million annually this year (a bit more than the voluntary $28 million).

And, education is only one of the huge set of problems the state and the cities of Seattle and Microsoft’s home base of Redmond face. Not only does Washington State maintain the most regressive tax system in the nation but it continues to go through a huge corporate boom while government function and key indicators of regional health are completely broken (I’ll be writing about this more in the next week.)

Cartoon by R.R. Anderson

Certainly there’s a positive side to Rep. Hunter, Smith and Microsoft deciding to make voluntary tax payments, but this group has played a horrible role in the evolution of Washington State government and policy over the past twenty years. While Robin Hood stole from the rich and gave to the poor, Microsoft and its shareholders stole from all the residents in Washington State and are starting to give a tiny bit back now on the condition that it’s spent on things they want it to be spent on.

While Northwest media are applauding Microsoft’s voluntary tax payments, if Microsoft’s new CEO Nadella really wants to lead change, the company needs to redirect its lobbyists and the Association of Washington Business to push for the state tax system to be completely restructured to include deeper investments from our most profitable corporations and a progressive income tax on their higher paid employees.

A Message to CEO Nadella

Mr. Nadella: Microsoft’s Counsel Smith has led the manipulation of tax law in this state for nearly twenty years and severely damaged its budget and capacity for education, transportation, healthcare and more. Certainly he’s made Microsoft’s shareholders wealthier but most of them primarily reside outside Washington State. If you truly want to lead Microsoft and our state in a positive direction, you have to come out and lead strongly on tax reform which will provide resources for the state to sustainably fund the needs of all of its citizens; and it’s probably time for Smith to retire and for you to hire a policy leader that reflects more of your vision.